Bitcoin has been having a tough couple of weeks. Speculations of its declining worth began circulating not too long ago, with critics citing the currency’s gradual plummet since last year. In January, bitcoin promoter Charles Shrem was charged with criminal conduct involving the black market website, Silk Road. In the first week of September, he pleaded guilty.
Shrem was accused of helping a dealer sell over a million “in bitcoins to customers on Silk Road, a Dark Web site where users could anonymously buy and sell contraband and drugs.” Prior to his indictment, Shrem was the vice president of the BitCoin Foundation and served as chief executive officer of the bitcoin exchange company, BitInstant.com. Shrem is only 24.
He worked with Silk Road dealer Robert Faiella of Cape Coral, FL. Faiella was known on the Silk Road by his online handle, “BTCKing.” According to prosecutors, Shrem knew that “Faiella operated a bitcoin exchange service for Silk Road users and that he personally handled the transactions to hide the business from his partners.” Further, Shrem was accused of personally processing Faiella’s transactions, giving him discounts on high-volume orders, failing “to file suspicious activity reports about [Faiella] and helped him circumvent the company’s anti-money-laundering restrictions.”
Though this activity is, of course, not a reflection of bitcoin’s other investors, backers and promoters, it does come at a time when the currency is already facing some scrutiny. It would hardly be fair to allow one person’s misconduct to shadow the innovation of bitcoin’s other supporters. Bitcoin’s universality has created the opportunity to forage awareness and donations for charities worldwide. It’s unfortunate that the relatively polarizing currency is facing further controversy. We will follow this story as it develops to better understand the future of online currency, and what may unfold for ecommerce in the years to come.